Last week was the 13F filings deadline at the SEC.
All stripes of money managers, from freshly minted mutual fund managers to hedge fund pros and patrician blue blood family offices, must send the Securities and Exchange Commission a list of every stock they owned at the end of the third quarter.
A simple comparison of this quarter’s filing to the last one shows what the best and brightest of Wall Street have been buying and selling recently.
The financial media and instant experts of the Internet have been all over the place in the last week, telling us what Warren Buffett, Cathie Wood, Michael Burry, Bill Ackman, and many other celebrity investors have been doing with their money recently.
It is undoubtedly a fun topic and occasionally interesting, but knowing what multi-gazillionaires are doing with their cash is not very useful for those of us still working to cobble together the first billion.
One of the most critical pieces of information from the quarterly filings is that most people who get paid to manage America’s money are mediocre at best.
What most do not realize is that this mediocrity is mostly intentional.
To be great, you must be different.
As Sir John Templeton pointed out, you cannot be great if you do what everyone else does.
Being different on Wall Street can get you fired.
Being a portfolio manager is a perfect job.
The easiest way to keep that job is to do what everybody else is doing.
That way, if something goes wrong, it is the market’s fault.
If you try to be great and something goes wrong, it is your fault.
The unemployment line beckons.
The trick to making money from the acts of idea piracy I perform every quarter is to dig deep and find those investors who dare to be different and are not managing so much money that mediocre is the best they can achieve.
One of the finest examples of that small handful of investors worthy of being raided is Glenn Greenberg of Brave Warriors Advisors.
The tale of Glenn Greenberg’s investing career is not a rags-to-riches tale by any stretch of the imagination.
His mother was the great-granddaughter of the founder of the Gimbels chain of department stores in New York.
While Gimbels closed in 1986, it was a major player in the retail industry for 144 years and is best known today (especially this time of year) for its role in “A Miracle on 34th Street.”
His father is Hall of Fame slugger Hank Greenberg, one of the greatest power hitters of all time. He helped lead the Detroit Tigers to two World Series titles.
Like many of the best investors, Glenn Greenberg did not take a traditional route to Wall Street. He got a degree in English from Yale University and followed that with a Master of Arts in Literature from New York University.
Then he went to Columbia and procured an MBA.
After completing his MBA in 1971, Greenberg joined Morgan Guaranty Trust’s Pension group as an analyst and portfolio manager, where he worked for five years. In 1978, he moved to Central-National Gottesman, collaborating with Arthur Ross and Edgar Wachenheim, two successful off-the-radar screen investors.
In 1984, Greenberg went out on his own with Chieftain Capital until 2010 when he outperformed the S&P 500 by 50% annually.
He and his partner parted company, and Greenberg founded Brave Warrior Advisors.
The outperformance has continued at Brave Warrior as Greenberg has outperformed the indexes by a wide margin.
Greenberg uses a value-oriented philosophy and takes a handful of positions in companies he considers excellent businesses that can be purchased at attractive prices.
Like most fund managers, Greenberg holds stocks for years, not just months.
Idea pirates who owned the top ten stocks in the Brave Warrior Portfolio have done very well.
Greenberg was only adding shares of a handful of his holdings in the past quarter.
The largest addition was a new position in Ryanair Holdings RYAAY, the Dublin-based discount airline.
Ryanair is known for its high operating efficiency and strong market position. The airline currently offers over 3,600 flights to destinations in 340 cities worldwide.
Ryanair has ambitious growth plans and is targeting a 50% growth in passenger numbers by the end of the decade, supported by its growing fleet of fuel-efficient aircraft.
The airline’s strong balance sheet will allow it to manage the ebbs and flows of the global economy and air travel.
Coupled with its history of consistent profitability and a shareholder-friendly approach to capital returns, the company’s growth plans and strong balance sheet create the opportunity for massive long-term gains for patient, aggressive investors.
Brave Warrior was also buying more TD Synnex Corp SNX shares. Synnex is a leading global distributor and solutions aggregator for the IT ecosystem, with over 150,000 customers in over 100 countries worldwide.
Synnex distributes products from over 2,500 vendors, including many in fast-growing marketplace segments like cloud, cybersecurity, big data/analytics, AI, IoT, mobility, and everything as a service.
Whoever the biggest winner in technology is going forward, there is a good chance Synnex will sell a significant percentage of the gear and equipment needed to reach their goals.
The firm’s third largest purchase is one of my favorite companies in one of my favorite industries.
We are not done using oil and gas.
We are not even close to being done.
We will need enormous amounts of both, especially natural gas, to fund the future of industry and technology.
It will all move through pipelines, terminals, processing centers, and other infrastructure.
Oil and gas companies will pay a fee to move their products through that infrastructure.
Much of that infrastructure is owned by MPLX MPLX, a publicly traded MLP.
They collect the fees and pay them out to shareholders as dividends.
The shares currently yield right around 7.5%.
The value of the assets they own and the cash they produce should increase over time.
A few years ago, I had a friend tell me they did not want to buy MLPs like MPLX because they hated dealing with K-1 forms at tax time.
Since then, he would have collected more than half the dividend purchase price, and the stock has almost tripled.
It would have been more profitable to pay the accountant.
Stealing ideas from Glenn Greenberg and his team may not be the most exciting thing you have ever done with your portfolio.
There is a good chance it could be the most profitable.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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